Music industry angry over music sold illegally at fraction of cost

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MOSCOW — A Russian Web site that lets visitors download albums for less than $1 is a smash hit with music fans — but not with U.S. trade and music industry officials.

The site is a pirate, they allege, and say Russia’s failure to close it down presents a direct obstacle to the country’s negotiations to join the World Trade Organization.

Russia is already the second-biggest source of pirate music, film and software in the world after China — costing U.S. companies nearly $1.8 billion last year, according to anti-piracy groups. The Web site www.allofmp3.com just adds to the dispute.

The site’s knockdown prices, coupled with its huge catalogue, crisp design and convenient downloading software make it a strong draw.

World music downloading leader iTunes charges a fixed 99 cents per song, but the Russian site offers tracks for a 10th of that price. Songs from the Red Hot Chili Peppers’ new double album, Stadium Arcadium, cost between 10 and 16 cents. The whole of Oral Fixation, Vol. 2, the latest album by Colombian pop star Shakira, can be had for just $1.40.

According to a report by the Britain-based IXN data company, which compared traffic volumes on Web sites offering music downloads, allofmp3 leapfrogged U.S. online music store Napster over the first half of the year to make it the second-most popular music site in the U.K. after iTunes.

But popular or not, the site is already under criminal investigation by Russian prosecutors and has been picked out by the U.S. Trade Representatives Office as an example of Russia’s bad record on tackling piracy.

Allofmp3, officials say, is jeopardizing Russia’s WTO bid as it seeks to reach an accession deal with the United States.

“The United States is seriously concerned about the growth of Internet piracy on Russian Web sites such as www.allofmp3.com ... the world’s largest server-based pirate Web site,” Neena Moorjani, chief spokeswoman for the Office of the United States Trade Representative, said Friday.

“Russia’s legal framework for intellectual property rights protection must meet WTO requirements ... In that context, we continue to call on Russia to shut down Web sites that offer pirate music, software and films for downloading,” she said.

The site warns users to check to make sure they are not violating the laws of their country before downloading songs and insists its mother company — MediaServices — is fully licensed to operate under Russian law.

“MediaServices pays license fees for all materials downloaded from the site subject to the Law of the Russian Federation,” the site says, citing an agreement with the Russian Multimedia and Internet Society.

That group, which goes by the acronym ROMS, says it collects and distributes royalties for online use of copyrighted music. ROMS claims that under Russian copyright law, it does not need permission from copyright holders to license the sale of music on the Internet.

“What can I say — this has to be decided by a court and no court has said this is illegitimate,” ROMS general director Oleg Nezus told The Associated Press. “... Believe me — I’m a lawyer, you have to understand the law as a whole.”

But Igor Pozhitkov of the International Federation of the Phonographic Industry, which represents Western recording giants such as Universal, Sony and EMI, says Nezus is reading the law selectively.

According to IFPI’s lawyers, agencies such as ROMS do not need to seek permission from rightholders if they are licensing the broadcasting, performance or transmission of works by cable — but they do if it concerns their sale over the Internet.

“They (ROMS managers) are using this as a money machine,” Pozhitkov said. “Hopefully they will defend it for a while and then disappear.”

Allofmp3 provides no phone numbers and questions e-mailed to addresses listed on the site went unanswered.